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Subject: Potential Energy and
Climate Change Policy Implications of a Trump Administration
The following is a compilation of energy and climate change policy
positions that President-elect Trump articulated both during and shortly after
the campaign. These positions were
pulled from a variety of sources, including campaign position papers, speeches,
and interviews. Our goal in compiling this list is to bring together in one
place what the President-elect has communicated around these topics in order to
provide structure to the discussion of the drivers that might shape policy and
what the eventual energy and climate change policies in a Trump administration
might look like. We want to emphasize
that the positions and statements listed below are not necessarily our views nor
are they necessarily our recommendations.
========================================================================
Vision: Both during and after
the campaign President-elect Trump articulated that he wants to pursue
American energy dominance as a strategic, economic and foreign policy priority
in order to become and stay independent of any need to import energy from the
OPEC cartel or any nations that are, in his view, hostile to American interests.
The second part of this vision is to leverage the ability of the United States
to produce low cost energy to improve the national trade balance by expanding
exports. Implicit in both parts of this vision is an acceptance of the view that
the US has the necessary amount of energy, be it coal, oil, gas or renewables to
more than satisfy its needs, and to do so at a competitive price.
o
Supply: Based on past statements by Mr. Trump, we believe this vision will
primarily translate into a
Drill, Baby, Drill, oil and gas strategy, which could result in a substantial
expansion of the current drilling footprint. However, this is not to say that
there will be no place for renewables in a Trump energy policy.
Rather, it seems that while such technology may
not be as favored with federal
regulatory or financial support as has been the case in recent years, it will
not be actively excluded from the energy strategy as long as its market
competitive. Though not explicitly stated as such, it does appear that the
Trump energy policy will be, at its core, rather Darwinian in that whatever
technology or fuel can deliver energy at a market competitive rate will be
favored. So, if, for example, solar or wind can deliver power at an
unsubsidized life cycle cost that is competitive with the cost of coal or gas
based power then it will be viewed favorably.
§
President-elect Trump has indicated that he believes he can make America energy
independent by taking advantage of the ongoing shale oil and shale gas
revolution, and by resurrecting the coal mining industry by removing regulatory
burdens on both coal mining and coal burn power generation that he believes to
be excessive.
§
He plans to expand onshore and offshore leasing on federal lands by increasing
the amount of acreage available for lease, and by reducing the number of
regulatory and institutional restrictions. Specific focus areas mentioned
during the campaign, include:
§
Encouraging the leasing of potential shale oil and gas resources for exploration
and exploitation, especially in the western USA. Now clearly, not all of this
acreage is prospective for shale oil and gas activity.
In fact, only a small fraction is potentially viable. That said,
with current use restrictions, it is relatively difficult to pursue any wells,
shale or otherwise that employ horizontal, multistage fracing.
§
Allowing
exploration and development on the Southeastern Outer Continental Shelf (OCS).
This acreage has only been lightly explored and none of it has been developed.
Candidate Trump conveyed the impression that he intends to change that.
§
Though candidate Trump repeatedly communicated his support of fracking, he did
introduce some confusion as to how firm this support might be.
At the end of July in Denver during a TV interview, he stated that he
supported local (meaning municipal) control of fracking, up to and including
banning the practice, which is not the position of most of the oil and gas
industry. However, Harold Hamm, CEO
of Continental Resources, and Mr. Trump’s energy advisor, indicated later that
Mr. Trump likely did not fully understand the question or the implications of
his answer, so probably didn’t really mean it. That said, Mr. Trump has not
publically repudiated the local control statement, so it is an unknown.
o
Demand: Mr. Trump’s primary
consideration here appears to be to provide energy to the market that is low
cost relative to that used by international competition.
His campaign position papers suggest he apparently believes this goal can
be accomplished without compromising clean air or water via the technology
revolution previously referenced, and through reduced regulatory burdens.
§
He has indicated that he intends to support economic growth by accelerating
infrastructure build out to take product from the oil and gas fields to markets.
Examples include:
§
The Keystone pipeline, where Trans Canada has already announced plans to renew
its permit application. A Trump administration is likely to approve the
application and support the subsequent construction.
§
A Trump administration will likely move forward on the currently stalled Dakota
Access Pipeline.
§
Based on Mr.Trump's campaign comments and position papers, I would expect it
likely his administration will encourage (demand?) state and federal regulators
to expedite reviews for both intrastate and interstate infrastructure projects,
such as natural gas pipelines, in order to speed product to market, and to lower
end user costs. One such example of the type of infrastructure efforts
where federal intervention might make a difference includes the construction of
pipelines from the shale gas fields of Pennsylvania to markets in New England.
o
Exports: President elect Trump's energy position explicitly states that he
intends to grow energy exports.
Though the position statement does not specify as a goal an increase in oil and
natural gas exports, given the totality of campaign comments and position
statements this is what is most likely intended.
§
Natural gas exports have been growing since the middle of the last decade
through a combination of growing pipeline exports (mainly to Mexico), and more
recently, the construction of LNG export facilities. The federal government's
ability to encourage more exports would probably be best achieved through tax
policy and expedited, narrower regulatory reviews of export related
infrastructure, such as pipelines and LNG facilities.
§
Crude oil exports are already increasing due to the repeal at the end of 2015 of
laws that prevented most US produced oil from being exported.
As shale oil costs continue to decline, and well productivity continues
to grow, costs per barrel will likely fall, meaning the ability of US firms to
competitively market crude could continue to grow.
o
Regulatory: Team Trump priorities
here appear to be threefold: 1)
Stop the slow motion, regulatory assault (their perspective) being directed
against the oil and gas, and coal industries. Harold Hamm call this a death by a
thousand cuts; 2) Stop the government from being distracted (again, their
perspective) by climate change
initiatives; 3)
Get the government out of the business of picking winners and
losers(their view), such as solar/wind over oil/coal, and let the market decide.
Specific actions mentioned during the campaign, include:
§
Shifting the attention of the Environmental Protection Agency (EPA) away from
climate change regulation and mitigation, and refocusing the Agency on its core
mission of ensuring clean air and safe drinking water.
§
Dismantling the Climate Action Plan. CAP is a broad set of executive
actions that impact a wide range of US industries, including power,
transportation, energy, construction and renewables. Central to the CAP is
the EPA Clean Power Plan, which is perceived by many Trump supporters as being
responsible, at least in part, for the decimation of the US coal industry.
Candidate Trump has made it clear that in a Trump administration EPA this
initiative will be shelved.
§
Eliminating the "Waters of the US" set of rules put forth by the EPA and the
Corp of Engineers. Mr. Trump apparently views WOTUS as overly broad and
punitive, and a clear example of the EPA reaching beyond its legal mandate.
§
Though Mr. Trump did not specifically address
Corporate
Average Fuel Economy (CAFÉ)
regulations and EV tax credits, there is a general expectation, given the
general tenor of his energy/EPA comments, that CAFÉ standards are going to be
relaxed significantly, and that EV tax credits will not be extended, and that
existing authorizations could be reduced either in number or in amount.
§
To operationalize the above, the new administration will seek to replace Gina
McCarthy, the current head of the EPA, as soon as possible.
Myron Ebell is a leading candidate.
Mr. Ebell has been named head of Mr. Trump’s EPA transition team, and is
currently head of the Competitive Enterprise Institute. He recently noted,
with apparent approval, that candidate Trump has consistently called for
increased fossil fuel development and a diminishment of the Obama
administration's climate change policies.
§
Suspending or eliminating the "stream rules". These rules, being put forth by
the Interior Department's Office of Surface Mining Reclamation and Enforcement
(OSMRE), have been hi-lighted by the Trump campaign as a prime example of the
"war on coal" being waged by the Obama administration.
§
Stop pursuing tighter federal methane emission standards for the US onshore oil
and gas industry.
§
Suspending efforts by the U.S. Bureau of Land Management to establish rules over
fracking on federal and tribal lands.
o
Climate Change: Reports indicate that during the campaign, candidate Trump
stated that he would cut all federal climate change spending—a sum his campaign
said would total $100 billion over the next 8 years, covering both domestic and
international climate change programs.
Specifics include:
§
Not contributing to the International Climate Change fund and related Green
Climate Fund. This is currently
projected to amount to 2-3 billion dollars a year.
§
Cutting domestic, direct federal spending to address global climate change.
It is estimated this totaled about $77 billion from FY 2008 through FY 2013, and
that 75 percent of that amount was for technology development and deployment,
mostly through the Department of Energy.
§
For FY 2014, approximately $11.6 billion was appropriated for these domestic
programs. This breaks down to about 68 percent for energy technology, 23
percent for science, 8 percent for international assistance and 1 percent for
adaptation to climate change.
o
International:
§
As a candidate, Mr. Trump repeatedly expressed skepticism regarding the wisdom
of pursuing implementation of the Paris climate agreement, which has not been
ratified by the US Senate. It has recently been reported that he is seeking ways
to exit from the agreement as quickly as possible.
However, and as noted above, candidate Trump has already committed to not
following through with the financial component of the agreement, i.e. not
funding either the International Climate Change fund or the Green Climate Fund.
§
Based on candidate Trump’s statements regarding the Keystone pipeline, a Trump
administration is likely to pursue a policy of more generally encouraging more
oil and gas imports from Canada to the US, compared to the present
administration’s opposition to such trade.
§
Potentially reinstitute some form of Iranian oil sanctions. The Energy Consulting GroupThe Energy Consulting Group home page |
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